Impacted by COVID-19, Commerce data points to a March retail sales slump

United States retail sales, for the month of March, felt the economic pain of the coronavirus, or COVID-19, based on data issued today by the United States Department of Commerce.

Commerce reported that March retail sales—at $483.1 billion—were down 8.7% compared to February, which represents the single largest annual monthly retail sales decline going back to when this data was first tracked by Commerce in 1992. February came in at $529.3 billion, which was upwardly revised by 0.4% compared to an initial reading of $528.1 billion. And compared to March 2019, March 2020 retail sales are down 6.2%.

Even with the significant decline from February to Match, total retail sales from January through March of this year are up 1.1% compared to the same period a year ago.

Commerce officials noted in this month’s release that “[d]ue to recent events surrounding COVID-19, many businesses are operating on a limited capacity or have ceased operations completely.” And they added that the U.S. Census Bureau has monitored response and data quality and determined estimates in this release meet publication standards. Commerce also noted that more information regarding how this specific report was compiled is available through this link.

March retail sales results, for certain sectors, were very mixed, depending on the type of commodity or sector.

Retail trade sales dropped 6.2% annually compared to February and were off 3.8% annually and food and beverage stores saw a 28% annual boost. Clothing and accessory stores tumbled 50.7% compared to March 2020. Non-store retailers, which includes e-commerce, rose 9.7%.

Other notable sector results for March included:

• department store sales down 24%;
• sporting goods, hobby, and book stores down 23%;
• motor vehicles and parts dealers down 25%;
• grocery stores up 29.3%;
• motor vehicle & parts, gas stations up 0.16%; and
• building material & garden supplies dealers up 7.6%

Neil Saunders, Managing Director of GlobalData Retail, pulled no punches, regarding this batch of data in a research note.

“Today’s retail sales numbers, which show an unprecedented rate of decline, make for grim reading,” he wrote. “The most worrying part is that not all of March was affected by the coronavirus. The first state stay at home order only came into place on March 19th and for the early part of the month most consumers were behaving normally. On top of that, the latter part of March saw a boost in spending on groceries, health products and home improvement – all things that helped support retail sales.”

But while March was largely dismal, Sanders said it will not be as bad, by comparison, to April, which he said is likely to be hideous, noting it appears that April will be a “write-off for retail,” due to stores remaining closed for the duration, coupled with panic buying having largely subsided and not lifting sales to the same degree. What’s more, he observed that the pairing of a dramatic spike in unemployment and a sharp decline in consumer confidence will, in effect, reduce the amount of money people have to spend, as well as their willingness to make purchases.

The declines in March retail sales match up with declining volumes, for the month out of the Port of Los Angeles and the Port of Long Beach, which account for well more than one-third of U.S.-bound imports, and saw annual declines of 30.9% and 6.4%, respectively.

In the Port Tracker report, which was issued last week by the National Retail Federation (NRF) and maritime consultancy Hackett Associates, NRF Vice President for Supply Chain and Customs Policy Jonathan Gold that even with factories in China getting back online, there still remains fewer U.S.-bound imports than were initially expected.

“Many stores are closed, and consumer demand has been impacted with millions of Americans out of work,” said Gold. “However, there are still many essential items that are badly needed and because of store closures cargo may sit longer than usual and cause other supply chain impacts.”

And NRF Chief Economist Jack Kleinhenz said that COVID-19 has hit the retail industry unevenly.

“This is a market of haves and have-nots,” he said. “The haves are the stores that remain open with lines out the doors to buy daily necessities while the have-nots are the stores that have closed and are taking the brunt of the impact of the pandemic. These numbers should come as no surprise given the mandated shutdown of our economy to slow the spread of the virus. March was a month that started out with many stores still open, but far more are closed now. Don’t be surprised if the data going forward shows a worsening situation. Even if the economy begins to reopen in May, consumer behavior may take a long time to adjust. The road to recovery could be long and slow.”